Bp june 2013

Grace Walsh Psychological Consultancy Ltd.

Risk and Decision Making"


Recent presentations and publications •  Association of Project Management –‘Resilience’, Sept 2012

•  Institute of Risk Management – ‘Risk Culture’ Paper, Nov 2012

•  European Risk Zone Conference – Vienna, Sept 2012

•  Project Zone Conference – Frankfurt, March 2013

•  DOP - 'Risk Type - The importance of Personality in Assessing Risk Tolerance’, May 2012

•  The Control Risk Self Assessment – ‘Risk Culture’, Sept 2012

•  Association of Business Psychology – ‘Risk Type and Decision Making’, Oct 2013


Introduction •  Areas of risk and H&S – focus has been on regulation

and legislation - individual differences neglected –  People can be the most significant risk factor –  Employee’s assets and limitations – informs training and

development

•  Individual differences often ignored as part of a risk/H&S programme – but have important workplace implications –  There are people in the boxes!

•  Research shows – people differ in their approach to risk. Individual risk appetite will influence decision-making and behaviour –  Need risk takers and risk averse


The Importance of Personality •  A number of personality attributes contribute to

employee safety (Costa & McCrae, 1987; Cellar, Nelson, York &Bauer, 2001; Conte & Jacobs, 2003; Salgado, 2002)

•  Our innate level of anxiety – our need for predictability, as well as our impulsivity and need for excitement •  These deeply rooted ‘tendencies’ determine our appetite for

risk - the foundations for Risk Type

•  Personalities can be strengths or weaknesses depending on the demands of the task •  We learn to deal with risk and manage our tendencies •  However stress or the intoxication of success can trigger a

reversion to our true Risk Type


The Risk-Type Compass®

•  Personality based assessment

•  Based on globally validated research on the FFM

•  Based on a robust and consensual core of global psychological research

•  Implications for risk management and decision making: –  Risk perception –  Decision-making –  Resilience –  Communication


The Risk-Type Compass®

•  Eight Risk Types

•  Continuous spectrum –  Adjacent Risk Types similar –  Facing Risk Types opposites

•  Markers (•) for extreme types are placed at the outer edge, moderate types near the centre

•  Central 10% Typical


Eight Risk Types

•  SPONTANEOUS Uninhibited, excitable, unpredictable and distraught when things go wrong.

•  INTENSE Enthusiastic and committed, but pessimistic and easily defeated by set-backs.

•  WARY Well organised but, anxious and fearful of failure they passionately seek to control.

•  PRUDENT Cautious, self-controlled and most comfortable with continuity and familiarity.

•  DELIBERATE Imperturbable, confident and systematic they are fearless and well prepared.

•  COMPOSED Calm, cool headed and optimistic they seeming oblivious to risk.

•  ADVENTUROUS Calm and unemotional but impulsive, daring and up for any challenge.

•  CAREFREE Unconventional and excitement seeking, their imprudence makes life exciting.


Prevalence of Risk Types: General Population


Risk Attitude –variable •  R-TC recognises the significance of risk

attitudes

•  Influenced by experience, training, current climate or personal circumstances

•  Focuses on five key domains addressed by research – Financial, health & safety, recreational, ethical

and social (Weber et al., 2002; Blais and Weber, 2006)


Type & Attitude

RISK TYPE

RISK ATTITUDE


Risk Tolerance Index (RTi)


Risk-Type Compass® Model •  Measure of Personality – Risk Type •  Measure of Attitude – Risk Attitude •  Measure of Tolerance – Risk Tolerance

Index


Report Structure

•  Assigns individuals to their appropriate Risk Type

•  Considers Risk Attitude across five key domains

•  Calculates the individual’s Risk Tolerance Index (RTi)


AUDITORS

RECRUITERS

ENGINEERS

IT PROFESSIONALS

Differentiation


Gender Differences

0

2

4

6

8

10

12

14

16

18

20

Wary Prudent Deliberate Composed Adventurous Carefree Spontaneous Intense

Percen

tage of sam

ple

Risk Type

Risk Types of males and females Males n=843, Females n=656

Male

Female


Applications of the "Risk Type Compass®


Uses of the Risk Type Compass®

•  3 Broad Areas of Application:

–  Individual

– Team

– Organisational


Discipline & Personal Responsibility (DPR) Workshops


Development Workshop Aims •  Understand individual risk propensity:

•  Own profile; strengths and limitations •  Other’s profiles and appreciating other contributions – risk takers and risk averse •  No bad or good profiles - just different

•  Understand management/dept risk appetite & dynamics?

•  Open up communication lines •  Reduce resistance and increase motivation •  Enhance working relationships •  Strengths, limitations – innovation and cautious exactness •  Informs corporate risk strategy and talent management

•  Personal responsibility for team effectiveness – ACOUNTABILITY


RTC Team Workshop •  Objective 1 – Personal responsibility – What can I do?

•  Objective 2 – Team responsibility – What can we do?


BUSINESS BENEFITS"•  Enhance individual/team effectiveness – appreciate risk

type and influence on risk perception, risk tolerance & decision-making

•  Produce better results and more efficient processes in risk and H&S - welcome diversity and strengthen communication

•  Promote accountability and responsibility when it comes to risk management and H&S – individual, team and wider organisation

•  Change mind sets – not all risk is bad – risk, creativity and competitive advantage

•  Inform risk management strategy – tangible measure of human factor risk and its impact on the overall risk equation

•  Inform talent management – selection, development and training


Positive Risk Management •  The world needs risk takers:

• Entrepreneurs • Creativity • Sales people • Heroes • Challengers of the status quo

•  Enron vs Kodak – two ways to fail •  Risk Culture & Friendly Fire •  Not about avoiding risk – it’s about managing

risk •  Managing risk against opportunity


Validity Studies •  Risk and Creativity (Cichomska, 2010)

Used the Creative Personality Scale (Gough, 1979)

Positive correlation between creativity and risk tolerance


Validity Studies •  Risk and Security (Gordon, 2010)

Need for Security negatively associated with Risk Tolerance Index


THE END

Tel: +44 (0) 1892 559540 Email: grace@psychological-

consultancy.com

Bp june 2013

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